Work that totals less than forty hours per week is considered ____

The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $145 per share for months, and you believ

user100 [1]

<u>Solution and Explanation:</u>

a) Let us calculate the value of call using Put-Call Parity,

i.e. Put + Stock = Call + Present Value of Exercise Price (note that it is 6 - months time period)

$\text { i.e. } 8.19+145=\mathrm{call}+145 / 1.09^{\wedge} 0.5$

$\text { i.e. } 8.19+145=\mathrm{call}+145 / 1.044$

Therefore, Call = $ 14.31

b1) The option strategy best suited in the given condition is - Short or Sell Straddle.

In shorting a straddle, you simultaneously sell a call and a put, thereby earning premium in both the legs of the strategy. It is a neutral options strategy wherein profits can be made when stock price is expected to remain stagnant. However it is to be noted that the profits are limited to the option premium earned on call and put but the risk is unlimited. i.e. only when you are reasonably sure as to the stock price remaining more or less constant, go for short straddle.

b2) Assuming that we went for short straddle, we earn $ 8.19 premium on put and $ 14.31 premium on call i.e. we earn maximum of $ 22.50 on this stock due to our position in options.

b3) WITHOUT CONSIDERING TIME VALUE -

Now, CONSIDERING TIME VALUE - the stock price would need to swing in either direction by ( $22.50 * 1.09 \times 0.5)=$ $ 23.49 for us to start incurring losses.

c) Buy the call, sell the put and lend $ 138.8848

Let 'Price' in the table below denote the stock price at the end of 6 months.

If we take a long position in call, the immediate CF is $ 14.31 (premium outflow).

If we take a short position in put, the immediate CF is $ 8.19 (premium inflow)

Position Immediate CF CF in 6 months CF in 6 months

(if price < X) (if price > X)

Call (Long) -14.31 0 Price - 145

Put (Short) 8.19 - (145 - price) 0

Lending Position $145 / 1.09^{\wedge} 0.5=138.88$ 145 145

Total Price Price

NOTE- FIGURES ARE SUBJECT TO ROUNDING OFF.

3 0

3 years ago

Which of the following is not a correct way of calculating a liquidity ratio?

aleksley [76]

Option C -Operating Cash Flow = Current Liabilities / Operating Cash Flow s not a correct way of calculating a liquidity ratio.

Liquidity ratios are a measure of a company's ability to settle its short-term payments. A company has the ability to quickly exchange its revenues and is using them to pay his obligations is dictated by its liquidity ratios. The potential to pay back debts and keep engaged on installments is simpler the better the ratio. Since this can vary by industry, and current ratio of 1.0 usually signals that a group's debt do not exceeding its liquid assets. In enterprises in which there is a quicker product changeover and/or shorter payment cycles, ratings below 1.0 may be acceptable.

Absolute liquidity ratio =(Cash + Marketable Securities)÷ Current Liability.

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3 0

1 year ago

In an economic decision making, when the inputs and outputs are fixed, the criterion to use is minimize the input.

Tresset [83]

Answer:

Correct answer is False for economic decision making, when the inputs and outputs are fixed, the criterion to use is minimize the input

Since, both input and output are fixed, the input can’t be decreased. Each of them has to be fixed in directive to vary the association among them. (It can be fixed contribution, or fixed production or neither one of them is fixed)

3 0

3 years ago

Read 2 more answers

What is the highest level of authoritative rules for state and local government accounting?

Serjik [45]

GASB statement is the highest level of authorities rules for state and local government accounting.

Government Accounting Standard Board statements and interpretations are the best levels of authority beneath GASB's GAAP hierarchy as established via GASB Statement No. 76, The Hierarchy of typically accepted Accounting ideas for the country and nearby Governments, that's effective for FY 2016.

This concept statement is considered one of a series that the GASB has issued or will problem. Concepts Statements are intended to offer a conceptual framework of interrelated goals and essential principles that can be used as a foundation for organizing constant accounting and financial reporting requirements.

Required governmental fund statements are a balance sheet and an announcement of sales, costs, and modifications in fund balances. Required proprietary fund statements are an assertion of internet assets; an assertion of revenues, prices, and modifications in fund internet property; and a statement of coins flow.

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7 0

1 year ago

Although you may know William Shakespeare from his classic literature, what is not well-known if that he was an astute investor.

coldgirl [10]

Answer:

oh shot man idk

Explanation:

3 0

3 years ago

Work that totals less than forty hours per week is considered _____ work.